Recent crystallographic data on the isolated extracellular domain of the epidermal growth factor receptor (EGFR) have suggested a model for its activation by ligand. We have tested this model in the context of the full-length EGFR displayed at the cell surface, by introducing mutations in two regions (CR1 and CR2) of the extracellular domain thought to be critical for regulation of receptor activation. Mutations in the CR1 and CR2 domains have opposing effects on ligand binding affinity, receptor dimerization, tyrosine kinase activation, and signaling competence. Tyr(246) is a critical residue in the CR1 loop, which is implicated in the positioning and stabilization of the receptor dimer interface after ligand binding; mutations of Tyr(246) impair or abolish receptor function. Mutations in CR2, which weaken the interaction that restricts the receptor to the tethered (inactive) state, enhance responsiveness to EGF by increasing affinity for the ligand. However, weakening of the CR1/CR2 interaction does not result in spontaneous activation of the receptors' kinase. We have used an antibody (mAb 806), which recognizes a transition state of the EGF receptor between the negatively constrained, tethered state and the fully active back-to-back dimer conformation, to follow conformational changes in the wild-type and mutant EGF receptors after ligand binding. Our results suggest that EGFR on the cell surface can be untethered, but this form is inactive; thus, untethering of the receptor is not sufficient for activation, and ligand binding is essential for the correct positioning of the two receptor subunits to achieve kinase activation.